Commentary to the condensed consolidated interim financial statements for the six months ended 30 June 2011

General

The board of Randgold & Exploration Company Limited (R&E) is pleased to announce the interim results for the six months ended 30 June 2011.

Dividend in specie and special cash dividend

The distribution of the company’s remaining investment in Gold Fields Limited (GFI) as well as a special cash dividend of 90 cents per R&E share, as approved by shareholders on 30 November 2010, was effected on 17 January 2011. Refer to the notes to these condensed consolidated interim financial statements for further details.

Income

The majority of the income recognised in the period under review was a result of profit realised on the distribution of the investments held for distribution and profit from the sale of prospecting rights.

Financial position

R&E is liquid with no interest-bearing debt. R&E’s total assets consist primarily of cash. R&E had a net asset value per share of R2.47 at 30 June 2011.

Cash flow

R&E started the period under review with a cash balance of R291.8 million. Operating activities utilised cash of R20.8 million during the period under review, primarily as a result of taxation paid and operating expenses.

Investing activities yielded cash inflows of R11.8 million resulting from dividends received and proceeds from the sale of prospecting rights.

The major cash outflow from financing activities for the period under review was the special cash dividend paid of R64.6 million.

R&E remains in a strong cash position with R218.1 million in cash and cash equivalents at 30 June 2011.

Outlook

Given R&E’s liquidity and position in the resources industry, management will continue to focus on seeking new opportunities, where appropriate, for the benefit of R&E and its shareholders. As in the past, a pragmatic commercial approach will be adopted in dealing with the outstanding legal claims.

DC Kovarsky                 Marais Steyn
Chairman                    Chief Executive Officer

Johannesburg
2 August 2011

 

Condensed consolidated interim statement of comprehensive income

		For the six months ended
		30 June 2011	30 June 2010
		Reviewed	Reviewed
	Notes	R’000	R’000
Revenue		1 826	12 048
Recoveries – JCI		–	783 549
– Other		–	25 205
Profit on sale of prospecting rights	7	9 963	–
Profit on distribution of investments	6	52 474	–
Foreign exchange gains		1 513	–
Other income		8	10 353
Other operating expenses		(14 505)	(38 592)
Profit from operating activities		51 279	792 563
Finance income		3 073	1 320
Profit before taxation		54 352	793 883
Taxation		954	(1 052)
Profit for the period		55 306	792 831
Other comprehensive income
Change in fair value of available-for-sale investments	6	(9 537)	11 618
Realised gain reclassified to profit or loss		(52 474)	–
Total comprehensive (loss)/income		(6 705)	804 449
Profit attributable to:
Non-controlling interest		–	628
Owners of the company		55 306	792 203
Profit for the period		55 306	792 831
Total comprehensive (loss)/income attributable to:
Non-controlling interest		–	628
Owners of the company		(6 705)	803 821
Total comprehensive (loss)/income		(6 705)	804 449
Basic and diluted earnings per share (cents)	8	77	1 103
Dividend per share (cents)	8	–	1 101

 

Condensed consolidated interim statement of financial position

		As at
		30 June 2011	31 December 2010
		Reviewed	Audited

	Notes	R’000	R’000
Assets
Non-current assets		776	782
Plant and equipment		302	308
Intangible assets		474	474
Current assets		220 586	568 291
Trade and other receivables		2 481	2 649
Investments held for distribution	6	–	273 845
Cash and cash equivalents		218 105	291 797
Total assets		221 362	569 073
Equity and liabilities
Shareholders’ equity		177 287	174 455
Issued capital		748	748
Share premium		–	–
Reserves		–	62 011
Retained earnings		176 539	111 696
Liabilities
Non-current liabilities
Post-retirement medical benefit obligation		36 114	36 429
Current liabilities		7 961	358 189
Tax liabilities		–	11 220
Shareholders for dividend		–	338 477
Trade and other payables		7 961	8 492
Total equity and liabilities		221 362	569 073

 

Condensed consolidated interim statement of changes in equity

		For the six months ended
		30 June 2011	30 June 2010
		Reviewed	Reviewed
	Notes	R’000	R’000
Share capital
Balance at the beginning and end of the period		748	748
Share premium		–	162 612
Balance at the beginning of the period		–	986 054
Distribution dividend		–	(823 442)
Investment fair value reserve		–	23 755
Balance at the beginning of the period		62 011	12 137
Change in fair value of available-for-sale investments		(9 537)	11 618
Realised gain reclassified to profit or loss		(52 474)	–
Retained earnings		176 539	316 518
Balance at the beginning of the period		111 696	(514 787)
Transaction with non-controlling shareholders		–	6 079
Profit for the period		55 306	792 203
Distribution dividend		–	33 023
Remeasurement of shareholders for dividend	6	9 537	–
Non-controlling interest		–	9 396
Balance at the beginning of the period		–	250 378
Transaction with non-controlling shareholders		–	(168 034)
Dividends paid to non-controlling shareholders		–	(73 576)
Profit for the period		–	628

 

Condensed consolidated interim statement of cash flows

	For the six months ended
	30 June 2011	30 June 2010
	Reviewed	Reviewed
	R’000	R’000
Profit before taxation	54 352	793 883
Adjusted for:
Recoveries not settled in cash	–	(808 754)
Profit on distribution of investments	(52 474)	–
Profit from sale of prospecting rights	(9 963)	–
Other non-cash items	(277)	5 277
Interest received	(3 073)	(1 320)
Dividends received	(1 826)	(12 048)
Working capital changes	(178)	38 727
Cash flows from operations	(13 439)	15 765
Interest received	3 073	478
Taxation paid	(10 450)	(329)
Cash flows from operating activities	(20 816)	15 914
Cash flows from investing activities	11 757	85 534
Dividends received	1 826	12 048
Proceeds from disposal of recovered assets	–	27 344
Proceeds on disposal of prospecting rights	9 963	–
Acquisition of plant and equipment	(39)	(288)
Proceeds from disposal of plant and equipment	7	–
Loan payments received	–	46 430
Cash flow from financing activities	(64 633)	(73 576)
Dividends paid	(64 633)	–
Dividends paid to non-controlling shareholders	–	(73 576)
Net (decrease)/increase in cash and cash equivalents	(73 692)	27 872

Cash and cash equivalents at the beginning of the period	291 797	294 806
Cash and cash equivalents at the end of the period	218 105	322 678

 

Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2011

1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa. The condensed consolidated interim financial statements of the company for the six months ended 30 June 2011 include the company and its subsidiaries (together referred to as “the group”).

2. Statement of compliance

The condensed consolidated interim financial statements for the six months ended 30 June 2011 have been prepared in compliance with the Listings Requirements of the JSE Limited, International Financial Reporting Standards (IFRS) (in particular International Accounting Standard 34 Interim Financial Reporting) and the AC 500 Standards as issued by the Accounting Practices Board or its successor.

 

These condensed consolidated interim financial statements were approved by the board of directors on 2 August 2011.

3. Significant accounting policies
The accounting policies applied by the group in these condensed consolidated interim financial statements are the same as those applied by the group in its consolidated financial statements as at and for the year ended 31 December 2010, except for the following standards and interpretations adopted on 1 January 2011:

Revised IAS 24	Related Party Disclosures
IFRIC 14	Amendment: Prepayments of minimum funding requirements
Various improvements to IFRSs 2010	Excluding amendments to IFRS 3 Business Combinations, IAS 27 Consolidated and Separate Financial Statements

There was no significant impact on these condensed consolidated interim financial statements as a result of adopting these standards and interpretations.

4. Independent review by the auditor
The condensed consolidated interim financial statements of R&E were reviewed by KPMG Inc. The individual auditor assigned to perform the review is Mr CH Basson. The unmodified review report is available for inspection at the company’s registered office.

5. Segment reporting
The group operates in a single operating segment as an investment holding company with assets in the mining industry.

6. Distribution of 2 270 687 GFI shares and special cash dividend of 90 cents per R&E share

On 30 November 2010, R&E shareholders approved the distribution of R&E’s remaining listed investment in GFI (amounting to 3.16193 GFI shares per 100 R&E shares held), as well as a cash dividend of 90 cents per share. These distributions were effected on 17 January 2011. STC was paid on the portion of the distribution not made out of share premium.

As a result of this distribution, the investment fair value reserve at 17 January 2011 of R52.4 million was reclassified to profit or loss.

	R’000
Investment held for distribution – 1 January 2011	273 845
Value of GFI shares at distribution date – 17 January 2011	(264 308)
Decrease in fair value of investment held for distribution recognised in other comprehensive income	9 537
Investment fair value reserve – 1 January 2011	(62 011)
Realised gain reclassified to profit or loss	52 474

	R’000
Shareholders for dividend – 1 January 2011	338 477
Remeasurement – 17 January 2011	(9 537)
Distribution	328 940
GFI Shares	264 307
Cash	64 633

7. Profit on sale of prospecting rights
During the period under review, R&E disposed of certain of its prospecting rights which had a nil carrying value to a third party for R10 million (refer to note 10).

8. Earnings per share and dividend per share

	For the six months ended
Basic earnings and diluted earnings per ordinary share	30 June 2011 Reviewed	30 June 2010 Reviewed
			Basic and diluted earnings for the period (R’000)	55 306	792 203
Weighted average number of ordinary shares in issue	71 813 235	71 813 128
Earnings per share (cents)	77	1 103
Headline and diluted headline earnings per ordinary share
Headline and diluted headline (loss)/earnings for the period (R’000)	(7 131)	805 717
Weighted average number of ordinary shares in issue	71 813 235	71 813 128
Headline (loss)/earnings per share (cents)	(10)	1 122
Reconciliation between basic and headline earnings for the period	R’000	R’000
Profit for the period attributable to the equity holders of the company	55 306	792 203
Adjusted for:

Profit on distribution/disposal of investments held for distribution/available-for-sale investments	(52 474)	(2 139)
Profit on disposal of prospecting rights	(9 963)	–
Impairment of investment held for distribution	–	15 653
	(7 131)	805 717
Tax effect of adjustments	–	–
Portion attributable to non-controlling interest	–	–
Headline (loss)/earnings for the period attributable to equity holders of the company	(7 131)	805 717
Dividend per share
Total dividend declared (R’000)	–	790 419
Eligible shares in issue	71 813 235	71 813 128
Dividend per share (cents)	–	1 101
Total dividend payable from R&E’s share premium (R’000)	–	823 442
Dividend payable to group entities recognised in retained earnings (R’000)	–	(33 023)
Shareholders for dividend per statement of financial position (R’000)	–	790 419

9. Net asset and tangible net asset value and per share
The net asset value per share is calculated using the following variables:

	30 June 2011 Reviewed	31 Dec 2010 Audited
Net asset value (R’000)	177 287	174 455
Ordinary shares outstanding	71 813 235	71 813 235
Net asset value per share (cents)	247	243
Net tangible asset value per share (cents)	246	242

The number of shares outstanding at 31 December 2010 and 30 June 2011 has been adjusted for the 3 million treasury shares held.

10. Material changes
There have been no material changes to the information contained in the independent mineral asset valuation reports that were disclosed to shareholders in the settlement circular, however, two prospecting rights over various farms (collectively known as the Jeanette Prospecting Right and Weltevreden Prospecting Right) were disposed of during the reporting period (refer to note 7).

11. Related party transactions
There were no related party transactions during the period under review.

12. Events after reporting date
There were no significant events between the reporting date and the approval date of these results.

Directors: DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*, MB Madumise**, JH Scholes** (*Executive, **Independent non-executive)
Secretary and Registered office: RP Pearcey FCIS, 7th Floor Fredman Towers, 13 Fredman Drive, Sandown, 2196
Transfer secretaries: Computershare Investor Services (Pty) Ltd (Registration number 2004/003647/07) 70 Marshall Street, Johannesburg, 2001
Sponsor: PSG Capital

In accordance with paragraph 3.4(b) of the Listings Requirements of the JSE Limited, companies are required to inform shareholders as soon as there is reasonable degree of certainty that the earnings of the company are likely to vary by more than 20% compared to the previous corresponding period.

The Board of Directors therefore wishes to advise shareholders that the Company expects to report basic earnings per share attributable to ordinary shareholders for the six months ended 30 June 2011 of between 69 cents and 85 cents, compared to basic earnings per share of 1 103 cents for the six months ended 30 June 2010.

Headline loss per share attributable to ordinary shareholders for the six months ended 30 June 2011 is expected to be between 2 cents and 18 cents per share, compared to headline earnings per share of 1 122 cents for the six months ended 30 June 2010.
Shareholders are reminded that the results for the comparable period in 2010 included the settlement with JCI Limited and a litigation settlement, which together contributed 1 126 cents to earnings per share and headline earnings per share.

The difference between earnings per share and headline loss per share in the current interim period is a result of the exclusion of certain re-measurement items when calculating the headline loss per share (in accordance with IFRS).

The financial information included in this trading statement has not been reviewed and reported on by the Company`s external auditors.

Johannesburg
12 July 2011

Sponsor:  PSG Capital (Proprietary) Limited

Shareholders are referred to the cautionary announcements dated 10 March 2011and 4 May 2011, and are advised that as negotiations are no longer proceeding, caution is no longer required to be exercised by shareholders when dealing in their securities.

Johannesburg
17 June 2011

Sponsor
PSG Capital (Pty) Limited

Further to the cautionary announcement dated 10 March 2011, shareholders are advised that negotiations are still in progress which, if successfully concluded, may have a material effect on the price of the Company’s securities.

Accordingly, shareholders are advised to continue exercising caution when dealing in the Company’s securities until a full announcement is made.

Johannesburg

4 May 2011
Sponsor
PSG Capital (Pty) Limited

Randgold & Exploration Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1992/005642/06)
Share Code: RNG & ISIN: ZAE000008819

(“R&E” or “the company”)

Summarised financial results of R&E for the year ended 31 December 2010

Commentary to the summarised results for the year ended 31 December 2010

General

The year to 31 December 2010 was significant for the company and shareholders should be pleased with the outcome. For many years the company’s major priority was to settle all claims with JCI Limited (JCI) and this was achieved on 23 June 2010. The JCI settlement had the effect of yielding a recovery R783.5 million to the group. This was declared as a dividend to shareholders. Subsequently a dividend valued at R338.4 million was declared, bringing the total dividends declared to shareholders to R1 110.1 million or R15.46 per R&E share for the financial year. The difference between the settlement amount and the dividend declared is mainly due to changes in the fair value of the assets distributed.

The settlement paved the way for the company’s suspension to be lifted on the JSE and this was achieved on 4 June 2010.

Your company is now a cleansed entity trading freely on the JSE. Not only was substantial value returned to shareholders, but R&E is optimally positioned to maximise the value of its remaining suite of assets.

In addition, various lawsuits against third parties were settled and this yielded further recoveries of R25.2 million. There remain material lawsuits against third parties and these were progressed during the year. The company has an adequate balance sheet to sustain these legal claims.

Priority has been given to ensure that the company’s prospecting rights are retained and exploited to ensure a commercially viable outcome.

The income statement

The group results for the 2010 year were positive, showing total profit of R741 million.

This was mainly as a result of recoveries made and dividends earned on investments. Continued expenditure on consulting, forensic, legal, audit fees and tax advisors was necessary to achieve the desired outcomes. In this regard, it is worth noting that R&E made recoveries of R25.2 million in addition to the JCI settlement in the year under review. The group also incurred substantial expenses in pursuit of the settlement with JCI.

The balance sheet

The major assets, excluding the assets held for distribution, of the R&E group as at 31 December 2010 consist of cash and prospecting rights. The board has adopted a minimum risk approach to protect the group’s cash investments, which are monitored daily in conjunction with a specialist treasury firm to maintain optimal returns with minimal associated risks. More than 90% of these investments yield a tax-free dividend return.

The group’s prospecting rights are stated at cost less impairments as we do not have sufficient geological information to allow us to declare the reserves as stated in the previously published competent persons reports. The group intends to retain most of its prospecting rights but will negotiate possible sale transactions with third parties where it is commercially sound to do so. Planned prospecting expenditure on all rights currently held is R21.7 million over the course of the next four years. R&E will progressively review the exploration programme to ensure efficient application of the company’s resources.

The post-retirement medical benefit obligation is unfunded. The group continues to fulfill its obligations. However, in managing the liability, we have successfully offered members of the medical aid scheme a cash amount in exchange for the renunciation of their benefits under the scheme, an alternative that is proving to be beneficial for both parties.

Income tax for the group currently consists mainly of tax payable in the form of STC as a result of the distributions to shareholders.

The R&E group has calculated tax losses as at 31 December 2010, but no deferred tax assets were raised as it is not probable that there would be future taxable profits against which to offset the tax losses. As in the past, certain tax matters dating back to 1998 that were part of the Kebble legacy are still being finalised with the South African Revenue Service.

Cash flow

The group’s primary cash inflows were as a result of investing activities, various loans owing to the group being repaid, dividends earned on cash and cash equivalents and the disposal of assets received in settlements. The group utilised this cash to fund its operations during the year.

Outlook

Setting aside the settlement with JCI, the outlook for 2011 is similar to that for the previous year. Expenditure on legal and operational expenses is expected to be at a similar level, which is likely to prevail until all claims have been finalised.

R&E is assessing various opportunities to utilise its assets. The positive net cash position further enhances the company’s ability to attract potentially lucrative opportunities, although the board will endeavour to always protect its asset base and ensure that there will be adequate funds to finalise all third party litigation.

The remaining claims against various parties are strategically evaluated on an ongoing basis and shareholders are once again assured that the board will adopt a commercial and pragmatic approach towards further recoveries.

David Kovarsky      Marais Steyn                  Van Zyl Botha
Chairman            Chief Executive Officer       Financial Director

Johannesburg
7 March 2011

The financial statements are presented on a summarised consolidated basis.

Statement of comprehensive income

				For the year ended 31 December
			2010			2009
	Notes		R’000			R’000
Revenue			20 408			17 433
Recoveries – JCI	6		783 549			–
– Other			25 204			60 240
Other income			9 805			220
Other operating expenses			(80 826)			(47 519)
Results from operating activities			758 140			30 374
Finance income			1 519			33 662
Profit before taxation			759 659			64 036
Taxation			(18 200)			(11 678)
Profit for the year			741 459			52 358
Other comprehensive income
Net change in fair value of available-for-sale investments	10		49 874			12 137
Foreign currency translation differences			–			19
Total comprehensive income			791 333			64 514
Profit or loss attributable to:
Non-controlling interest			54			17 615
Owners of the company			741 405			34 743
Profit for the year			741 459			52 358
Total comprehensive income attributable to:
Non-controlling interest		54			17 615
Owners of the company		791 279			46 899
Total comprehensive income for the year		791 333			64 514
Basic and diluted earnings per share (cents)	11	1 032			48

Statement of financial position

			As at 31 December
			2010	2009
		Notes	R’000	R’000
Assets
Non-current assets			782	247 032
Plant and equipment			308	108
Intangible assets			474	474
Investments in equity securities			–	246 450
Current assets			568 291	549 096
Loans receivable			–	207 543
Trade and other receivables			2 649	46 747
Investments held for distribution		10	273 845	–
Cash and cash equivalents			291 797	294 806
Total assets			569 073	796 128
Equity and liabilities
Shareholders’ equity			174 455	484 152
Issued capital			748	748
Share premium			–	986 054
Reserves			62 011	12 137
Retained earnings/(Accumulated loss)			111 696	(514 787)
Non-controlling interest		7, 8	–	250 378
Total equity			174 455	734 530
Liabilities
Non-current liabilities
Post-retirement medical benefit obligation			36 429	34 575
Current liabilities			358 189	27 023
Tax payable			11 220	15 579
Shareholders for dividend		11	338 477	–
Trade and other payables			8 492	11 444
Total equity and liabilities			569 073	796 128

Statement of changes in equity

		For the year ended 31 December
		2010	2009
	Notes	R’000	R’000
Share capital
Balance at the beginning and end of the period		748	748
Share premium		–	986 054
Balance at the beginning of the period		986 054	986 054
Settlement distribution	11	(803 804)	–
GFI and cash distribution	11	(182 250)	–
Foreign currency translation reserve		–	–
Balance at the beginning of the period		–	(19)
Movement for the period		–	19
Investment fair value reserve		62 011	12 137
Balance at the beginning of the period		12 137	–
Net change in fair value of available-for-sale investments		49 874	12 137
Accumulated profit / (loss)		111 696	(514 787)
Balance at the beginning of the period		(514 787)	(549 530)
Transaction with non-controlling shareholders	8	9 074	–
Profit for the period		741 405	34 743
Settlement distribution	11	32 231	–
GFI and cash distribution	11	(156 227)	–
Non-controlling interest		–	250 378
Balance at the beginning of the period		250 378	232 763
Transaction with non-controlling shareholders	7,8	(171 051)	–
Dividends paid to non-controlling shareholders		(79 381)	–
Profit for the period		54	17 615

Statement of cash flows

	For the year ended 31 December
	2010	2009
	R’000	R’000
Profit before taxation	759 659	64 036
Adjusted for:
Recoveries not settled in cash	(808 754)	–
Other non-cash items	26 420	(378)
Finance income	(1 519)	(33 662)
Dividends received	(20 408)	(17 433)
Working capital changes	41 146	(46 627)
Cash utilised in operations	(3 456)	(34 064)
Finance income	635	1 040
Taxation paid	(22 559)	(10 088)
Cash flows from operating activities	(25 380)	(43 112)
Cash flows from investing activities	101 752	62 174
Dividends received	20 408	17 433
Proceeds from disposal of recovered assets	27 344	–
Proceeds on disposal of investment in equity securities	8 061	–
Acquisition of investment in equity securities	–	(5 129)
Acquisition of investment in subsidiary	(202)	–
Acquisition of plant and equipment	(285)	(14)
Loan payments received	46 426	135 350
Loans advanced	–	(85 466)
Cash flow from financing activities
Dividends paid to non-controlling shareholders	(79 381)	–
Translation effect on foreign cash and cash equivalents	–	19
Net increase/(decrease) in cash and cash equivalents	(3 009)	19 081
Cash and cash equivalents at the beginning of the period	294 806	275 725
Cash and cash equivalents at the end of the period	291 797	294 806

Notes to the financial statements for the year ended 31 December 2010

1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa. The financial statements of the company for the year ended 31 December 2010 include the company and its subsidiaries (together referred to as the “group”).

2. Statement of compliance
The summarised consolidated financial statements for the year ended 31 December 2010 have been prepared in compliance with International Accounting Standard (IAS) 34 Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board and the Companies Act of South Africa.

These financial statements were approved by the board of directors of R&E on 7 March 2011.

3. Significant accounting policies
The accounting policies applied by the group in these financial statements are in accordance with International Financial Reporting Standards (IFRS) and are consistent with those applied by the group in its consolidated financial statements for the year ended 31 December 2009. The following standards and interpretations were adopted on 1 January 2010:

– IAS 27: Amendment Consolidated and Separate Financial Statements;
– Various: Improvements to International Financial Reporting Standards 2009;
– IFRS 3: Business Combinations; and
– IFRIC 17: Distribution of Non-cash Assets to Owners (IFRIC 17).

There was no significant impact on these financial statements as a result of adopting these standards and interpretations, except for IFRIC 17.

IFRIC 17 addresses the accounting treatment for non-cash distributions made to owners. In terms of IFRIC 17 a liability is recognised at the fair value of the asset to be distributed when the distribution is authorised. The asset to be distributed is reclassified as held for distribution and measured in accordance with IFRS 5. Re-measurement of the liability at fair value of the asset to be distributed will be recognised in equity. When the distribution is made, the liability and the asset will be derecognised. IFRIC 17 has been applied prospectively.

All dividends declared during 2010 (refer note 11) have been accounted for in terms of IFRIC 17.

4. Independent audit by the auditors
The summarised consolidated statement of financial position at 31 December 2010 and the related summarised consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended and related notes was audited by KPMG Inc. The individual auditor assigned to perform the audit is Mr CH Basson. KPMG’s unqualified audit report is available for inspection at the registered office of the company.

5. Segment reporting
The group operates in a single operating segment as an investment holding company with assets in the South African mining industry.

6. Settlement with JCI Limited and distribution of shares
On 28 May 2010, the shareholders of R&E approved the settlement agreement with JCI Limited (JCI) as well as the distribution of the shares received as part of the settlement to R&E shareholders. The JCI shareholders also approved the settlement with R&E on 4 June 2010.

The settlement circular, containing full details of the settlement, was distributed to shareholders on 12 May 2010. As a result of the settlement, the JCI group transferred the following assets to the R&E group on 2 July 2010:

– 6 051 632 GFI shares; and
– 1 555 710 220 JCI shares (a fresh issue).

A recovery of R783,5 million was recognised in profit or loss on 23 June 2010 (the date on which the last suspensive condition contained in the settlement agreement was met) at the fair value of the shares receivable.

No tax liability arose from the settlement transaction as all the affected entities within the group have sufficient income tax and capital gains tax losses to absorb the recovery. There were also no tax consequences as a result of the distribution of the abovementioned GFI and JCI shares, as it was made partially out of share premium and partially as an unbundling in terms of section 46 of the Income Tax Act.

On 5 July 2010, R&E distributed the above shares as well as the 305 186 049 JCI shares already held by it (JCI unbundling shares) to its shareholders.

The JCI shares received as part of the settlement as well as the JCI unbundling shares were valued at R0.105 per share. The revaluation of the JCI unbundling shares resulted in a R15.6 million impairment being recognised in profit or loss.

7. Excussion of FSD shares from JCI
At 31 December 2009, R&E had a loan receivable from the JCI group of R207.5 million. This loan was secured by a pledge of shares held by JCI in Free State Development and Investment Corporation Limited (FSD). On 14 January 2010 (the agreed settlement date), JCI was unable to make a full repayment of the loan. As a result, R&E exercised its security and became the beneficial owner of a further 6 690 610 FSD shares at an agreed value of R161.9 million, increasing its shareholding in FSD by 30.10% to 85.21%.

8. Purchase of remaining stake in FSD
On 19 November 2010, the company purchased the remaining 14.79% stake in FSD from JCI for a consideration of R0.2 million. The decrease in value was a result of cash distributions made by FSD prior to the acquisition.

9. Distribution of 2 270 687 GFI shares and special cash dividend of 90 cents per R&E share
On 30 November 2010, R&E shareholders approved the distribution of R&E’s remaining listed investment in GFI (amounting to 3.16193 GFI shares per 100 R&E shares held), as well as a cash dividend of 90 cents per share.

These distributions were effected on 17 January 2011. STC is payable on the portion of the distribution not made out of share premium.

10. Investments held for distribution
At the reporting date, the GFI shares referred in note 9 (which represent the group’s entire remaining portfolio of listed securities) were revalued to fair value, with the gain recognised in other comprehensive income. The shares were then re-classified as “Investments held for distribution” in accordance with IFRIC 17.

11. Earnings per share and dividend per share

	For the year ended 31 December
	2010	2009
Basic earnings and diluted earnings per ordinary share
Basic and diluted earnings for the period (R’000)	741 405	34 743
Weighted average number of ordinary shares in issue	71 813 182	73 063 128
Earnings per share (cents)	1 032	48
Headline and diluted headline earnings per ordinary share
Headline and diluted headline earnings for the period (R’000)	754 893	34 743
Weighted average number of ordinary shares in issue	71 813 182	73 063 128
Headline earnings per share (cents)	1 051	48
	R’000	R’000
Reconciliation between basic and headline earnings for the period
Profit for the period attributable to the equity holders of the company	741 405	34 743
Adjusted for:
Profit on disposal of available-for-sale investments	(2 165)	–
Impairment of investment held for distribution	15 653	–
	754 893	34 743
Tax effect of adjustments	–	–
Portion attributable to non-controlling interest	–	–
Headline earnings for the period attributable to equity holders of the company	754 893	34 743
Dividend per share
Total dividends declared	1 110 050	–
– 23 June 2010	771 573	–
– 30 November 2010	338 477	–
Eligible shares in issue	71 813 235	–
Dividend per share (cents)	1 546	–

The dividend distribution to ordinary shareholders of the company, as declared on 23 June 2010 of R771.6 million, consists of the JCI settlement assets amounting to R771.8 million and the JCI unbundling shares of R32.0 million adjusted for the portion returned to the group by virtue of its 3 million treasury shares.

	R’000	R’000
Total dividend payable from R&E’s share premium	803 804	–
Dividend payable to group entities recognised in retained earnings	(32 231)	–
Dividend distributed	771 573	–

The dividend payable to ordinary shareholders of the company, excluding the treasury shares, amounting to R338,4 million, as declared on 30 November 2010, consists of 2 270 687 GFI shares and a special cash dividend of R64,6 million which was recognised in the statement of financial position as a liability.

12. Net asset and tangible net asset value and per share

	31 December 2010	31 December 2009
Net asset value per share (cents)	243	674
Net tangible asset value per share (cents)	242	674

13. Material changes
To the knowledge of the board, there have been no material changes to the information contained in the independent mineral asset valuation reports that were disclosed to shareholders in the settlement circular.

14. Related-party transactions
As a result of the settlement during the year, the JCI group is no longer considered a related party. For major transactions with JCI refer to notes 6, 7 and 8.

15. Events after reporting date
Refer to note 9 for the significant event occurring after 31 December 2010.

16. Annual general meeting

Details concerning the date, time and venue of R&E’s annual general meeting will be announced on SENS in due course.

Directors:
DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*, MB Madumise**,
JH Scholes**
(* Executive, ** Independent non-executive)

Secretary and Registered office:
RP Pearcey FCIS, 7th Floor Fredman Towers, 13 Fredman Drive, Sandown, 2196

Transfer secretaries:
Computershare Investor Services (Pty) Limited
(Registration number 2004/003647/07) 70 Marshall Street, Johannesburg 2001

Johannesburg
10 March 2011

Sponsor: PSG Capital (Pty) Limited

Shareholders are advised that R&E has entered into negotiations, which if successfully concluded, may have a material effect on the price of the Company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until a full announcement is made.

Johannesburg
10 March 2011

Commentary to the summarised results for the year ended 31 December 2010

General

The year to 31 December 2010 was significant for the company and shareholders should be pleased with the outcome. For many years the company’s major priority was to settle all claims with JCI Limited (JCI) and this was achieved on 23 June 2010. The JCI settlement had the effect of yielding a recovery R783.5 million to the group. This was declared as a dividend to shareholders. Subsequently a dividend valued at R338.4 million was declared, bringing the total dividends declared to shareholders to R1 110.1 million or R15.46 per R&E share for the financial year. The difference between the settlement amount and the dividend declared is mainly due to changes in the fair value of the assets distributed.

The settlement paved the way for the company’s suspension to be lifted on the JSE and this was achieved on 4 June 2010.

Your company is now a cleansed entity trading freely on the JSE. Not only was substantial value returned to shareholders, but R&E is optimally positioned to maximise the value of its remaining suite of assets.

In addition, various lawsuits against third parties were settled and this yielded further recoveries of R25.2 million. There remain material lawsuits against third parties and these were progressed during the year. The company has an adequate balance sheet to sustain these legal claims.

Priority has been given to ensure that the company’s prospecting rights are retained and exploited to ensure a commercially viable outcome.

The income statement

The group results for the 2010 year were positive, showing total profit of R741 million.

This was mainly as a result of recoveries made and dividends earned on investments. Continued expenditure on consulting, forensic, legal, audit fees and tax advisors was necessary to achieve the desired outcomes. In this regard, it is worth noting that R&E made recoveries of R25.2 million in addition to the JCI settlement in the year under review. The group also incurred substantial expenses in pursuit of the settlement with JCI.

The balance sheet

The major assets, excluding the assets held for distribution, of the R&E group as at 31 December 2010 consist of cash and prospecting rights. The board has adopted a minimum risk approach to protect the group’s cash investments, which are monitored daily in conjunction with a specialist treasury firm to maintain optimal returns with minimal associated risks. More than 90% of these investments yield a tax-free dividend return.

The group’s prospecting rights are stated at cost less impairments as we do not have sufficient geological information to allow us to declare the reserves as stated in the previously published competent persons reports. The group intends to retain most of its prospecting rights but will negotiate possible sale transactions with third parties where it is commercially sound to do so. Planned prospecting expenditure on all rights currently held is R21.7 million over the course of the next four years. R&E will progressively review the exploration programme to ensure efficient application of the company’s resources.

The post-retirement medical benefit obligation is unfunded. The group continues to fulfill its obligations. However, in managing the liability, we have successfully offered members of the medical aid scheme a cash amount in exchange for the renunciation of their benefits under the scheme, an alternative that is proving to be beneficial for both parties.

Income tax for the group currently consists mainly of tax payable in the form of STC as a result of the distributions to shareholders.

The R&E group has calculated tax losses as at 31 December 2010, but no deferred tax assets were raised as it is not probable that there would be future taxable profits against which to offset the tax losses. As in the past, certain tax matters dating back to 1998 that were part of the Kebble legacy are still being finalised with the South African Revenue Service.

Cash flow

The group’s primary cash inflows were as a result of investing activities, various loans owing to the group being repaid, dividends earned on cash and cash equivalents and the disposal of assets received in settlements. The group utilised this cash to fund its operations during the year.

Outlook

Setting aside the settlement with JCI, the outlook for 2011 is similar to that for the previous year. Expenditure on legal and operational expenses is expected to be at a similar level, which is likely to prevail until all claims have been finalised.

R&E is assessing various opportunities to utilise its assets. The positive net cash position further enhances the company’s ability to attract potentially lucrative opportunities, although the board will endeavour to always protect its asset base and ensure that there will be adequate funds to finalise all third party litigation.

The remaining claims against various parties are strategically evaluated on an ongoing basis and shareholders are once again assured that the board will adopt a commercial and pragmatic approach towards further recoveries.

David Kovarsky      Marais Steyn                  Van Zyl Botha
Chairman            Chief Executive Officer       Financial Director

Johannesburg
7 March 2011

The financial statements are presented on a summarised consolidated basis.Statement of comprehensive income

				For the year ended 31 December
			2010			2009
	Notes		R’000			R’000
Revenue			20 408			17 433
Recoveries – JCI	6		783 549			–
– Other			25 204			60 240
Other income			9 805			220
Other operating expenses			(80 826)			(47 519)
Results from operating activities			758 140			30 374
Finance income			1 519			33 662
Profit before taxation			759 659			64 036
Taxation			(18 200)			(11 678)
Profit for the year			741 459			52 358
Other comprehensive income
Net change in fair value of available-for-sale investments	10		49 874			12 137
Foreign currency translation differences			–			19
Total comprehensive income			791 333			64 514
Profit or loss attributable to:
Non-controlling interest			54			17 615
Owners of the company			741 405			34 743
Profit for the year			741 459			52 358
Total comprehensive income attributable to:
Non-controlling interest		54			17 615
Owners of the company		791 279			46 899
Total comprehensive income for the year		791 333			64 514
Basic and diluted earnings per share (cents)	11	1 032			48

Statement of financial position

			As at 31 December
			2010	2009
		Notes	R’000	R’000
Assets
Non-current assets			782	247 032
Plant and equipment			308	108
Intangible assets			474	474
Investments in equity securities			–	246 450
Current assets			568 291	549 096
Loans receivable			–	207 543
Trade and other receivables			2 649	46 747
Investments held for distribution		10	273 845	–
Cash and cash equivalents			291 797	294 806
Total assets			569 073	796 128
Equity and liabilities
Shareholders’ equity			174 455	484 152
Issued capital			748	748
Share premium			–	986 054
Reserves			62 011	12 137
Retained earnings/(Accumulated loss)			111 696	(514 787)
Non-controlling interest		7, 8	–	250 378
Total equity			174 455	734 530
Liabilities
Non-current liabilities
Post-retirement medical benefit obligation			36 429	34 575
Current liabilities			358 189	27 023
Tax payable			11 220	15 579
Shareholders for dividend		11	338 477	–
Trade and other payables			8 492	11 444
Total equity and liabilities			569 073	796 128

Statement of changes in equity

		For the year ended 31 December
		2010	2009
	Notes	R’000	R’000
Share capital
Balance at the beginning and end of the period		748	748
Share premium		–	986 054
Balance at the beginning of the period		986 054	986 054
Settlement distribution	11	(803 804)	–
GFI and cash distribution	11	(182 250)	–
Foreign currency translation reserve		–	–
Balance at the beginning of the period		–	(19)
Movement for the period		–	19
Investment fair value reserve		62 011	12 137
Balance at the beginning of the period		12 137	–
Net change in fair value of available-for-sale investments		49 874	12 137
Accumulated profit / (loss)		111 696	(514 787)
Balance at the beginning of the period		(514 787)	(549 530)
Transaction with non-controlling shareholders	8	9 074	–
Profit for the period		741 405	34 743
Settlement distribution	11	32 231	–
GFI and cash distribution	11	(156 227)	–
Non-controlling interest		–	250 378
Balance at the beginning of the period		250 378	232 763
Transaction with non-controlling shareholders	7,8	(171 051)	–
Dividends paid to non-controlling shareholders		(79 381)	–
Profit for the period		54	17 615

Statement of cash flows

	For the year ended 31 December
	2010	2009
	R’000	R’000
Profit before taxation	759 659	64 036
Adjusted for:
Recoveries not settled in cash	(808 754)	–
Other non-cash items	26 420	(378)
Finance income	(1 519)	(33 662)
Dividends received	(20 408)	(17 433)
Working capital changes	41 146	(46 627)
Cash utilised in operations	(3 456)	(34 064)
Finance income	635	1 040
Taxation paid	(22 559)	(10 088)
Cash flows from operating activities	(25 380)	(43 112)
Cash flows from investing activities	101 752	62 174
Dividends received	20 408	17 433
Proceeds from disposal of recovered assets	27 344	–
Proceeds on disposal of investment in equity securities	8 061	–
Acquisition of investment in equity securities	–	(5 129)
Acquisition of investment in subsidiary	(202)	–
Acquisition of plant and equipment	(285)	(14)
Loan payments received	46 426	135 350
Loans advanced	–	(85 466)
Cash flow from financing activities
Dividends paid to non-controlling shareholders	(79 381)	–
Translation effect on foreign cash and cash equivalents	–	19
Net increase/(decrease) in cash and cash equivalents	(3 009)	19 081
Cash and cash equivalents at the beginning of the period	294 806	275 725
Cash and cash equivalents at the end of the period	291 797	294 806

Notes to the financial statements for the year ended 31 December 2010

1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa. The financial statements of the company for the year ended 31 December 2010 include the company and its subsidiaries (together referred to as the “group”).

2. Statement of compliance
The summarised consolidated financial statements for the year ended 31 December 2010 have been prepared in compliance with International Accounting Standard (IAS) 34 Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board and the Companies Act of South Africa.

These financial statements were approved by the board of directors of R&E on 7 March 2011.

3. Significant accounting policies
The accounting policies applied by the group in these financial statements are in accordance with International Financial Reporting Standards (IFRS) and are consistent with those applied by the group in its consolidated financial statements for the year ended 31 December 2009. The following standards and interpretations were adopted on 1 January 2010:

– IAS 27: Amendment Consolidated and Separate Financial Statements;
– Various: Improvements to International Financial Reporting Standards 2009;
– IFRS 3: Business Combinations; and
– IFRIC 17: Distribution of Non-cash Assets to Owners (IFRIC 17).

There was no significant impact on these financial statements as a result of adopting these standards and interpretations, except for IFRIC 17.

IFRIC 17 addresses the accounting treatment for non-cash distributions made to owners. In terms of IFRIC 17 a liability is recognised at the fair value of the asset to be distributed when the distribution is authorised. The asset to be distributed is reclassified as held for distribution and measured in accordance with IFRS 5. Re-measurement of the liability at fair value of the asset to be distributed will be recognised in equity. When the distribution is made, the liability and the asset will be derecognised. IFRIC 17 has been applied prospectively.

All dividends declared during 2010 (refer note 11) have been accounted for in terms of IFRIC 17.

4. Independent audit by the auditors
The summarised consolidated statement of financial position at 31 December 2010 and the related summarised consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended and related notes was audited by KPMG Inc. The individual auditor assigned to perform the audit is Mr CH Basson. KPMG’s unqualified audit report is available for inspection at the registered office of the company.

5. Segment reporting
The group operates in a single operating segment as an investment holding company with assets in the South African mining industry.

6. Settlement with JCI Limited and distribution of shares
On 28 May 2010, the shareholders of R&E approved the settlement agreement with JCI Limited (JCI) as well as the distribution of the shares received as part of the settlement to R&E shareholders. The JCI shareholders also approved the settlement with R&E on 4 June 2010.

The settlement circular, containing full details of the settlement, was distributed to shareholders on 12 May 2010. As a result of the settlement, the JCI group transferred the following assets to the R&E group on 2 July 2010:

– 6 051 632 GFI shares; and
– 1 555 710 220 JCI shares (a fresh issue).

A recovery of R783,5 million was recognised in profit or loss on 23 June 2010 (the date on which the last suspensive condition contained in the settlement agreement was met) at the fair value of the shares receivable.

No tax liability arose from the settlement transaction as all the affected entities within the group have sufficient income tax and capital gains tax losses to absorb the recovery. There were also no tax consequences as a result of the distribution of the abovementioned GFI and JCI shares, as it was made partially out of share premium and partially as an unbundling in terms of section 46 of the Income Tax Act.

On 5 July 2010, R&E distributed the above shares as well as the 305 186 049 JCI shares already held by it (JCI unbundling shares) to its shareholders.

The JCI shares received as part of the settlement as well as the JCI unbundling shares were valued at R0.105 per share. The revaluation of the JCI unbundling shares resulted in a R15.6 million impairment being recognised in profit or loss.

7. Excussion of FSD shares from JCI
At 31 December 2009, R&E had a loan receivable from the JCI group of R207.5 million. This loan was secured by a pledge of shares held by JCI in Free State Development and Investment Corporation Limited (FSD). On 14 January 2010 (the agreed settlement date), JCI was unable to make a full repayment of the loan. As a result, R&E exercised its security and became the beneficial owner of a further 6 690 610 FSD shares at an agreed value of R161.9 million, increasing its shareholding in FSD by 30.10% to 85.21%.

8. Purchase of remaining stake in FSD
On 19 November 2010, the company purchased the remaining 14.79% stake in FSD from JCI for a consideration of R0.2 million. The decrease in value was a result of cash distributions made by FSD prior to the acquisition.

9. Distribution of 2 270 687 GFI shares and special cash dividend of 90 cents per R&E share
On 30 November 2010, R&E shareholders approved the distribution of R&E’s remaining listed investment in GFI (amounting to 3.16193 GFI shares per 100 R&E shares held), as well as a cash dividend of 90 cents per share.

These distributions were effected on 17 January 2011. STC is payable on the portion of the distribution not made out of share premium.

10. Investments held for distribution
At the reporting date, the GFI shares referred in note 9 (which represent the group’s entire remaining portfolio of listed securities) were revalued to fair value, with the gain recognised in other comprehensive income. The shares were then re-classified as “Investments held for distribution” in accordance with IFRIC 17.

11. Earnings per share and dividend per share

	For the year ended 31 December
	2010	2009
Basic earnings and diluted earnings per ordinary share
Basic and diluted earnings for the period (R’000)	741 405	34 743
Weighted average number of ordinary shares in issue	71 813 182	73 063 128
Earnings per share (cents)	1 032	48
Headline and diluted headline earnings per ordinary share
Headline and diluted headline earnings for the period (R’000)	754 893	34 743
Weighted average number of ordinary shares in issue	71 813 182	73 063 128
Headline earnings per share (cents)	1 051	48
	R’000	R’000
Reconciliation between basic and headline earnings for the period
Profit for the period attributable to the equity holders of the company	741 405	34 743
Adjusted for:
Profit on disposal of available-for-sale investments	(2 165)	–
Impairment of investment held for distribution	15 653	–
	754 893	34 743
Tax effect of adjustments	–	–
Portion attributable to non-controlling interest	–	–
Headline earnings for the period attributable to equity holders of the company	754 893	34 743
Dividend per share
Total dividends declared	1 110 050	–
– 23 June 2010	771 573	–
– 30 November 2010	338 477	–
Eligible shares in issue	71 813 235	–
Dividend per share (cents)	1 546	–

The dividend distribution to ordinary shareholders of the company, as declared on 23 June 2010 of R771.6 million, consists of the JCI settlement assets amounting to R771.8 million and the JCI unbundling shares of R32.0 million adjusted for the portion returned to the group by virtue of its 3 million treasury shares.

	R’000	R’000
Total dividend payable from R&E’s share premium	803 804	–
Dividend payable to group entities recognised in retained earnings	(32 231)	–
Dividend distributed	771 573	–

The dividend payable to ordinary shareholders of the company, excluding the treasury shares, amounting to R338,4 million, as declared on 30 November 2010, consists of 2 270 687 GFI shares and a special cash dividend of R64,6 million which was recognised in the statement of financial position as a liability.

12. Net asset and tangible net asset value and per share

	31 December 2010	31 December 2009
Net asset value per share (cents)	243	674
Net tangible asset value per share (cents)	242	674

13. Material changes
To the knowledge of the board, there have been no material changes to the information contained in the independent mineral asset valuation reports that were disclosed to shareholders in the settlement circular.

14. Related-party transactions
As a result of the settlement during the year, the JCI group is no longer considered a related party. For major transactions with JCI refer to notes 6, 7 and 8.

15. Events after reporting date
Refer to note 9 for the significant event occurring after 31 December 2010.

16. Annual general meeting

Details concerning the date, time and venue of R&E’s annual general meeting will be announced on SENS in due course.

Directors:
DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*, MB Madumise**,
JH Scholes**
(* Executive, ** Independent non-executive)

Secretary and Registered office:
RP Pearcey FCIS, 7th Floor Fredman Towers, 13 Fredman Drive, Sandown, 2196

Transfer secretaries:
Computershare Investor Services (Pty) Limited
(Registration number 2004/003647/07) 70 Marshall Street, Johannesburg 2001

Johannesburg
10 March 2011

Sponsor: PSG Capital (Pty) Limited